Launch of the Second Code for Responsible Investing (CRISA 2) at GEPF’s Annual Thought Leadership Conference

The CRISA Committee and GEPF partnered to launch CRISA 2 at the GEPF and World Bank co-hosted Annual Thought Leadership Conference 2022. The conference took place on 15-16 September 2022 at the CTICC, Cape Town. 

The Second Code for Responsible Investing in South Africa, 2022 (“CRISA 2”) builds on the first CRISA Code (2011) and contains five voluntary principles for stewardship and responsible investment as a key component of the South African governance framework.

The principles of CRISA 2 are of universal relevance, and capable of flexible application on a proportionate basis as the context may require. The code can be applied by asset owners, asset managers and service provider organisations who voluntarily align themselves with the principles. CRISA 2 also applies to asset owners, asset managers and service providers. Other organisations within the investment value chain or who may be involved in investment arrangements and activities, are similarly encouraged to apply the principles of CRISA 2.

CRISA 2 is issued by the CRISA Committee and is endorsed by ASISA, Batseta, FSCA, GEPF and IoDSA.

The effective date for reporting publicly on the application of CRISA 2 is 1 February 2023.

Rationale for CRISA 2

The first Code for Responsible Investing in South Africa (CRISA) was launched in 2011 to encourage institutional investors and service providers to integrate environmental, social and governance (ESG) issues into their investment decisions. Since 2011, the world has seen significant advancements in the regulatory and governance context as it relates to responsible investment and stewardship.

Executive Chairman of All Weather Capital and Third Way Asset Management Group, John Oliphant wrote the foreword to the code, directing an appeal at stakeholders in the industry to apply CRISA 2:

“We have come a long way since the early days of CRISA and the UN PRI. Regulation 28, Guidance Note 1 of 2019 and National Treasury’s Sustainable Finance Initiative continue to build on the foundations set in 2011. I therefore urge all stakeholders involved in the investment industry to pledge their support for CRISA 2.”

Humanity faces multiple global threats, such as climate change, social inequality and diseases of pandemic scale. For its part, South Africa continues its battle against the triple ills of poverty, inequality and unemployment, exacerbated by economic contraction, failures in both private and public governance, racial tensions and gender-based violence, and calls for more urgent action on energy security and a just transition to a low-carbon economy.

Responsible investment and stewardship are also increasingly finding application across all asset classes including, for example, in fixed income and infrastructure investment, as well as beyond public markets. ESG factors are clearly linked to a company’s purpose and long-term performance and should be considered not only in the context of engagement and voting, but also in investment decisions relating to valuation and the buying or selling of financial assets.

“The triple ills of poverty, inequality and unemployment, exacerbated by the Covid-19 pandemic and recent global events require our collective and urgent action. CRISA 2 aims to spur much needed impetus towards achieving positive outcomes to address South Africa’s unique environmental and social challenges, as part of the delivery of inclusive, cost effective, relevant and transparent financial services and products to benefit our clients and beneficiaries.”  – John Oliphant, Executive Chairman: All Weather Capital and Third Way Asset Management Group

Within the South African context, a sharpening focus on responsible investment and stewardship demonstrates that the country is ripe for the further innovations that are needed to achieve a systemic shift from commitment into action with more impact. This is demonstrated, for example, through the ongoing work of National Treasury’s Sustainable Finance Initiative and initiatives such as (but not limited to) King IV™, Regulation 28 of the Pension Funds Act, 1956, FSCA Guidance Notice No. 1 of 2019 (issued in terms of the Pension Funds Act, 1956): Sustainability of investments and assets in the context of a retirement fund’s investment policy statement.

“In the eleven years since CRISA’s first launch, our support as conduct regulator has not wavered. CRISA 1, and now CRISA 2, are for a good cause. Recently, sustainable and impact investing have gained significant traction. CRISA provides invaluable guidance for transitioning to a low-carbon, socially inclusive and resilient economy.” –   Olano Makhubela, Divisional Executive: Retirement Funds Supervision, FSCA

Despite these developments, there remains a general sense that action from the investment community is lagging both in urgency and scope. CRISA 2 aims to spur much-needed impetus in this regard through enabling a sharpened recognition of how investment arrangements and activities intersect with the environment and society. As part of a holistic corporate governance ecosystem, CRISA 2 can facilitate ongoing, proactive and mindful consideration of the risks and opportunities, dynamics and trends that could inform or influence investment arrangements and activities, modelling positive outcomes across the investment value chain.

“GEPF is delighted to endorse CRISA 2 and its principles. We are committed to helping build a better society and playing our part in making this happen. As a long-standing supporter of responsible investment and stewardship, GEPF has played a significant role in the mainstreaming of responsible investing in South Africa and on the African continent. GEPF is proud to be counted as a founding signatory to the United Nations Principles for Responsible Investment (PRI) and to have played a leadership role in the development and launch of the first CRISA Code of 2011, ” says Musa Mabesa Principal Executive Officer, GEPF adding that “As a member of the CRISA Committee I look forward to contributing to CRISA’s next chapter. It is critically important that our collective industry efforts result firstly in improved retirement outcomes for our members and pensioners, and secondly, for a shared future that is more sustainable and inclusive for all South Africans.”

The 5 Principles of CRISA 2

Principle 1: ESG INTEGRATION

Investment arrangements and activities should reflect a systematic approach to integrating material environmental, social and governance (ESG) factors.

Principle 2: STEWARDSHIP

Investment arrangements and activities should demonstrate the acceptance of ownership rights and responsibilities diligently enabling effective stewardship.

Principle 3: CAPACITY BUILDING AND COLLABORATION

Acceptance and implementation of the principles of CRISA 2 and other applicable codes and standards should be promoted through collaborative approaches (as appropriate) and targeted capacity building throughout the investment industry.

Principle 4: GOVERNANCE

Sound governance structures and processes should be in place (including at all levels of the organisation) to enable investment arrangements and activities that reflect and promote responsible investment and diligent stewardship, including proactively managing conflicts of interest.

Principle 5: TRANSPARENCY

Investment organisations should ensure disclosures are meaningful, timeous and accessible to enable stakeholders to make informed assessments of progress towards the achievement of positive outcomes.

Objective and supporting objectives of CRISA 2:

The main objective of CRISA 2 is to reaffirm a framework of principles for stewardship and responsible investment as a key component of the South African governance framework.

The Code has as further objectives the following:

To position stewardship and responsible investment principles and practices within a broader context as universally relevant throughout the investment value chain and across all asset classes, investment styles and type and size of organisation.

To create a context within which the investment environment can evolve towards positive outcomes to address South Africa’s unique environmental and social challenges, including poverty, inequality, unemployment and transformation, balanced with the delivery of suitable, transparent, cost-effective and relevant services to the users and beneficiaries of investment products.

To incorporate the implementation of sound governance practices as they relate to stewardship and responsible investment, and foster accountability for implementation and disclosure.

To cultivate integrated thinking throughout the investment industry, through building capacity in the six capitals, and understanding of the triple context of society, economy, and environment within which businesses operate, as well as their relevance on the impacts on the six capitals.

To establish meaningful reporting about practices of stewardship and responsible investment.

To encourage collaborative action towards the mainstreaming of sustainable finance that contributes to a more equitable and inclusive economy.

To promote the development and implementation of green and sustainability-oriented investments and investment vehicles that address ESG issues (such as those encapsulated in the SDGs and NDP).

Endorsements from CRISA 2 endorsers:

“Retirement funds, as asset owners and stewards of long-term capital, can positively impact the society and environment we all want. This pivotal role extends to asset managers, consultants, markets and other service providers. Funds, locally and globally, are expected and now increasingly required to disclose and report ESG-related matters in their audited annual financial statements. Our financial sector should be relatively well prepared for these fast-paced developments given the policy and regulatory guidance from Government and the FSCA. We will continue to issue such guidance when necessary to assist with compliance and continue nudging the industry to do what is right and necessary.” Olano Makhubela, Divisional Executive: Retirement Funds Supervision, FSCA

“GEPF is delighted to endorse CRISA 2 and its principles. We are committed to helping build a better society and playing our part in making this happen. As a long-standing supporter of responsible investment and stewardship, GEPF has played a significant role in the mainstreaming of responsible investing in South Africa and on the African continent. GEPF is proud to be counted as a founding signatory to the United Nations Principles for Responsible Investment (PRI) and to have played a leadership role in the development and launch of the first CRISA Code of 2011. As a member of the CRISA Committee I look forward to contributing to CRISA’s next chapter. It is critically important that our collective industry efforts result firstly in improved retirement outcomes for our members and pensioners, and secondly, for a shared future that is more sustainable and inclusive for all South Africans.” Musa Mabesa, Principal Executive Officer, GEPF

 “The issuing of CRISA 2 is an opportunity for again acknowledging the significant role of institutional investors in governance. The way that institutional investors exercise stewardship in making investment and voting decisions is an indispensable mechanism for holding investee companies accountable – not only for financial returns but also for the sustainable creation of value for society and the natural environment.”

“The actions and decisions of institutional investors have important consequences over the longer term. They affect directly the outcomes for those who funded these investments through their contributions and who should benefit from them. Indirectly, they have consequences for society more broadly and even for future generations. Together , CRISA 2 and King IVTM set the bar for how investors, boards and management of companies should do their part to evolve the corporate governance system. The hope is that we will in future look back on the issuing of CRISA 2 as a milestone event in the history of governance in South Africa.” Ansie Ramalho, Chair: King Committee  


The CRISA 2 Code titled “The Second Code for Responsible Investing in South Africa “CRISA 2” can be downloaded here

Additional CRISA 2 information is available via https://www.crisa2.co.za/